Jobless rate climbs to highest level since 1983
WASHINGTON — The unemployment rate jumped almost half a point to 9.7 percent in August, the highest since 1983, reflecting a poor job market that will make it hard for the economy to begin a sustained recovery.
While the jobless rate rose more than expected, the economy shed a net total of 216,000 jobs, less than July’s revised 276,000 and the fewest monthly losses in a year, according to Labor Department data released Friday. Economists expected the unemployment rate to rise to 9.5 percent from July’s 9.4 percent and job reductions to total 225,000.
By contrast, in a healthy economy, employers need to add a net total of around 125,000 jobs a month just to keep the unemployment rate stable.
“It’s good to see the rate of job losses slow down,” said Nigel Gault, chief U.S. economist at IHS Global Insight. But “we’re still on track here to hit 10 percent (unemployment) before we’re done.”
The rise in the jobless rate was largely due to the government finding that the number of unemployed Americans jumped by nearly 500,000 to 14.9 million, while 73,000 people joined the civilian labor force. Those figures are from a different survey than the report on total job cuts.
The civilian labor force usually grows as a recession winds down and optimism about finding work grows. But as long as Americans remain anxious about their jobs, consumer spending isn’t expected to rise enough to power a rebound.
“There isn’t the underlying fuel there for strong consumer spending growth,” Gault said.
Instead, most of the current rebound in the economy stems from auto companies and other manufacturers restocking inventories, which have plummeted as factories and retailers have sought to bring goods more in line with reduced sales.
Few economists think that can provide the basis for a sustainable recovery. Gault forecasts the economy will grow at a 3.7 percent clip in the current July-September quarter, but expects that to fall to 2.4 percent by the fourth quarter and 2 percent in the first quarter next year.
Analysts expect businesses will be reluctant to hire until they are convinced the economy is on a firm path to recovery. Many private economists, and the Federal Reserve, expect the unemployment rate to top 10 percent by the end of this year.
If laid-off workers who have settled for part-time work or have given up looking for new jobs are included, the so-called underemployment rate reached 16.8 percent, the highest on records dating from 1994. That rate rose because the number of workers settling for part-time hours, either because their employer cut their work week or because that’s all they could find, increased by about 300,000.
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